What is FICO Score?

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Everywhere you turn; you hear and read about FICO Credit scores. Are they really that important if you are not in the market for a loan or credit card? Four good reasons why you need a good credit score; it determines

1. whether you will be approved for credit for mortgages, car loans, installment loans, and credit cards

2. what interest rate you will get on those loans

3. the cost of your homeowners and car insurance

4. in some cases, whether you get that job offer you’ve been hoping for

How is your FICO Score Calculated?

The best way to ensure a good FICO credit score is to manage your credit responsibly over time. To maximize your score, it’s important to understand what goes into the calculation and how much each factor is weighted:

Types of Credit in Use: 10% -- considers the number of credit accounts and the mix of credit types: credit cards, installment loans, mortgages, and is most important if you don’t have a very long credit history.

Payment History: 35% -- Takes into account (1)many different types of payments, including mortgages, major credit cards, department store credit cards, car loans, other installment loans such as for furniture, etc., (2)information from public records, such as bankruptcies, liens, lawsuits, foreclosures, judgments, and wage garnishments, (3)details of any missed or late payments, such as the amount, how long ago it occurred, how late it was.

Amounts Owed: 30%-- Looks at (1)the total of all the mounts you owe for all accounts (2)the mix of accounts owed (credit cards versus installment loans, for example),(3)the number of accounts that hove balances, (4)how much of your total credit available on credit cards and installment loans you are using (the closer you are to maxing out your available credit, the more negative impact on your score), and (5)how much of the original balance borrowed you still owe on installment loans, like your car loan.

Length of Credit History: 15%-- As long you don’t have negative information in your file, the longer your credit history, the higher your score.
New Credit:10%-- Considers (1)how many new credit accounts you’ve opened recently, (2)how long it’s been since you opened a new credit account, (3)how many requests you’ve made for credit recently, (4)how long its been since lenders have requested credit information on you, and (5)how good your recent credit history has been.

How Can You Improve Your FICO Credit Score?

Armed with information about what goes in to the calculation of your credit score, you can develop your own plan for improving your score. Her are the nine best ways to improve your score:

1. Order a copy of your credit report. Review it carefully. Correct any significant errors.

2. Pay your bills on time.

3. Don’t open a lot of new accounts over a short time period, especially if you have a short credit history.

4. Shop for credit over a short period to time. FICO scores distinguish between searching for credit for a specific loan and searching for lost of different credit lines.

5. If you have a questionable credit history, open a few new credit accounts, use them responsibly, and pay them off on time.

6.Don’t open credit accounts your don’t intend to use.

7.A credit card or installment loan can raise your score as long as you don’t have too high a balance and you pay it off in a timely manner.

9. Pay off credit card debt rather than move it around to lower rate cards. Moving balances to other credit cards and closing out the old account can hurt your score because it can change the ratio of your total credit card balances to your available credit lines.

How long will it take to improve your credit score?

Negative items affect your credit score much more quickly than positive items. Late payments can negatively affect your score in just a few months, whereas paying bills on time may take 6 to 12 months to generate a significant improvement in your score.

If you need to be pre qualified for a loan, refinance a loan, refinance a home loan, get your credit print out, run your credit, want a personal credit report, get a personal credit report, get a credit report print out , please contact me personally via email , phone call, mail, or stop by in my office. See you soon !

Please contact me personally via email or phone for a confidential discussion of your Real Estate Needs and Wants and How Can We Help You to Reach Your Goals.

For all fellow Real Estate Professionals In Real Estate , we pay 30% referral fee for all referrals to our area of Real Estate and Business service in Greater Los Angeles Areas. Please contact me for more info and details.

Protecting your identity, Stop Credit Bureaus Experian, Trans Union, Equifax, from Selling Your Private Information to the scums of the earth or anybody who pays for it ... !

The credit bureaus were ordered by Congress to create this shared one-call opt-out system in 1996. Nothing in the law requires credit bureaus to collect AND SELL YOUR PRIVATE DATA.
The credit bureaus sell names and addresses to credit card companies who in turn mail pre-approved offers of credit to consumers. If you do not want to receive such solicitations, opt out.

Consumers may now request online that the national credit bureaus remove their names from lists sold to companies for marketing pre-approved offers.
You have the ability to opt out of credit card offers that you receive in the mail.

To opt out, optout, opt-out, of unsolicited credit card and mortgage offers, for 5 years or FOR EVER , and to take your name off of direct marketing lists, log on to http://www.optoutprescreen.com or call 1-888-5-OPTOUT or 1-888-567-868
When you call this number, you may request to have your name and address removed from national credit bureau lists

FICO Score Explanation and How Can You Fix it .

Your credit history has been reduced to a three-digit number, and you should know what that number is, especially if you plan on purchasing anything on credit soon.

This three digit number is most commonly nicknamed a FICO score. This is an acronym for Fair Isaac and Co. The folks at FICO will not disclose how these scores are arrived at, however, FICO Claims to use 30 elements to determine risk.

We know for sure that they consider Credit Delinquencies (Have you been late on car payments? Credit Cards? Your Mortgage?) Amount of Outstanding Debt, (Are you 'maxed-out' on your credit cards? Do you have several car loans?) Credit History, (How long have you used credit? Do you have a long standing history of paying your bills?) Credit Inquiries, (Have you applied for 15 new Visa cards this month? Department Stores? Shopping for a car?)

Do I have a good FICO Score? Your score will fall some where between 300 and 900 with most consumers falling somewhere between 500 and 800.

A FICO in the 500's is a very low score, which translates to lenders as high risk.

In the 600's is considered a medium score. Your payment history will be closely scrutinized and written explanations regarding the derogatory credit will likely be required prior to issuing any credit. Many mortgage lenders will not lend to someone with a FICO of under 640.

A FICO of 680 or higher is considered a high score, again translating to low risk for the lender and lower costs to the consumer.

There is some very powerful proof of the direct correlation between these numbers and the risks involved. For example, based on FHLMC (Freddie Mac) 1994 loan purchases with repayment performance measured through April of 1996:
Loans with FICO's of 661or greater had less than 1% foreclosures.
Loans with FICO's of 620 to 660 had a foreclosure rate of just over 2%

The clearest illustration of the value of these scores is the fact that loans with FICO's of 619 or less had over 8% foreclosure rate.

So this isn't to say that if you have a low FICO you can't get a loan. In financing a home, you will just pay a bit more for it because there is approximately an 8% chance that you will go into foreclosure. In fact, if you do discover you have a low FICO, you are in esteemed company. Two years ago, Federal Reserve Governor Lawrence Lindsey was denied a Toys R Us credit card for a low FICO.

Can I "fix" my credit? You may want to begin your research by ordering a credit report from ALL THREE of the reporting bureaus below:

Equifax Credit Information Services
Atlanta, GA (800) 685-1111

Trans Union Corporation
Springfield, PA (800) 851-2674

TRW Information Services
Chatsworth , CA (800) 682-7654

This way, if there are any errors on your report you can get them corrected. Credit bureaus are required to respond to your written request within 30 days. It is important that you know that even cleaning up any discrepancies with the credit bureaus will not immediately raise your FICO. Generally, we are seeing a 60 to 90 day time span for either derogatory or positive marks to significantly impact a FICO.

If you find yourself needing to "repair" your credit, please keep in mind that the Credit Repair Companies" can only correct errors. They cannot erase a poor credit history. If the information shown on your report is accurate, no one can remove it until the 7 to 10 year reporting period is up. It may make more sense (I promise it will be cheaper) for you to work with the bureaus yourself.

Please contact me personally via email or phone for a confidential discussion of your Real Estate Needs and Wants and How Can We Help You to Reach Your Goals.

For all fellow Real Estate Professionals In Real Estate , we pay 30% referral fee for all referrals to our area of Real Estate and Business service in Greater Los Angeles Areas. Please contact me for more info and details.

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John Vostenak, Realtor, CA Broker, Lic#: 00871958 CENTURY 21 Ludecke Inc. • 20 E. Foothill Blvd , Suite 105 • Arcadia, California 91006 USA
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